Domino\'s Pizza First Half Profits Drop by 46% on German Business Costs

Domino's Pizza posted a 46% fall in first-half profits owing to poor growth in the UK business and charges against its German arm.

Although the pre-tax profit increased by 10.3% to £25.7m (€30m, $39.3m) from the previous year, exceptional items ate into the group's cash pile.

The global fast-food delivery brand's reported a pre-tax profit of £11.6m for the six months to 30 June, after exceptional items, which is a drop from £21.5m in 2012.

Exceptional items are related to an £11.1m impartial charge on the German master franchise agreement and corporate store costs.

Domino's also warned the market that its losses, from its two-year old German subsidiary, could outgrow its core British business by as much as £6m in 2013.

"In our fledgling German business, as in the UK, our franchisees are those with the expertise to run great stores," said Lance Batchelor, Chief Executive Officer.

"We know the best way to get great results from stores is to put them in the hands of franchisees - and with five world-class franchisees now operating in the German market and more arriving shortly, we are excited about the future in this territory."

Overall Growth

The underlying business in the UK and Ireland continued to grow, with sales increasing by 11.2% to £317.9m, compared to £285.9m year-on-year.

Britain's biggest pizza delivery firm reported improved like-for-like sales with an increase of 6.4%. In the Republic of Ireland, sales increased by 6.5%, compared to the previous year's 2.9%.

In Germany it posted a surge of 23.8% while in Switzerland the like-for-like was reported at 7.8%.

Group sales also increased 13.8% to £326.5m.

Earnings per share climbed 5.4% to 10.71p where the company's interim dividend increased by 7.6% this year.

The company which has nearly 800 stores has grown as a result of new products, promotions and online demand.